How do you know if you’re prepared for retirement?

Tony Clark

Senior Propositions Manager, St. James’s Place Wealth Management

As you make your way through your later life, you may question if you are as prepared as you could be for retirement. This could mean reimagining what retirement really means to you.

There’s a great deal to think about when it comes to retirement – how long do you want to keep working? Have you saved enough? Do you want to completely retire or gradually ease into semi-retirement first? Fundamentally though, it’s a question of what you want the next stage of your life to be like. 

It can also be a complex and challenging time both emotionally and financially. Not least of which is the fact that retirement will look and feel very different to previous generations, so we don’t really have a template to work from anymore. Crucially, the time spent in retirement is likely to last for a very long time, possibly 30 years or more. 

This is where engaging with ongoing financial advice can add real value; on one hand helping you to imagine the bigger picture and realise your plans and on the other navigating the myriad decisions that you will face along the way to achieving your dreams.  

So, what are the factors that you need to have in mind, and how can advice help? 

Creating retirement income 

Whilst this may sound straight forward enough, what works for one person may not be the right solution for another. There are many ways to generate retirement income, but the challenge is ensuring it is sustainable, whilst at the same time managing and maintaining (hopefully growing) your remaining capital for the rest of your life.  

There is now a trend to easing into retirement, gradually shifting the work/life balance over a number of years rather than the hard stop of previous generations. This means understanding how to make the most tax efficient use of your retirement assets (which could include other investments and savings alongside your pensions) and in which order. 

A financial adviser can work with you to map out your cashflow requirements based around your short, medium and longer-term goals, allowing for external economic shocks whilst incorporating your views and capacity for risk. 

There is now a trend to easing into retirement, gradually shifting the work/life balance over a number of years.

Social care planning 

As we are all living much longer lives on average, there is an increasing likelihood that some of us will experience a need for social care, either for our elderly loved ones, or a future need for ourselves.  

Unless we see any drastic legislative changes, the sobering fact is that most of us will have to pay for some or all of our social care. This is one of the last financial taboos, a problem that all too often gets kicked into the long grass.  

There isn’t a simple answer to this other than to meet it head on, utilising financial advice to build into your longer term later life financial planning so you can mitigate having to make difficult choices at an emotionally raw time.

Estate planning and transferring wealth across generations 

How we pass on our wealth once we have died, or even what we might do in the event of receiving an inheritance needs careful planning, as this can be somewhat of a minefield and mistakes can be expensive. 

As an integral part of later life financial planning, estate planning and intergenerational wealth transfer permeates into how you might use your pensions, what assets fall in or out of your estate and how you use your various tax allowances. This means having a financial roadmap to provide clarity for you and your loved ones. 

All of this lies ahead and needs careful attention; the value of advice as we get older is found in providing peace of mind as our circumstances change, so that you can focus on what really matters most to you.